Nigerian States Are Billionaires in US Dollars-Part-74-Export Driven Youth Employment & Income Generation Potentials of Zamfara State

AfCFTA Implementation Strategies-Part-7: The Commitment

This is the seventh in the series of ten parts articles on the AfCFTA implementation Strategies. This edition is focused on Commitment on the part of the government. The commitment of the president and all the government agencies are very critical element in the implementation programme. This needs to be demonstrated to the private sector in order to encourage them to invest their time, energy and money to take full advantage of the AfCFTA. To demonstrate this commitment, the presidency needs to put this in the front burner in all the activities of the president by mentioning it in all his economic related speeches at different functions and programmes he attends within and outside the country. This will make his ministers to be able to give the required support to the AfCFTA implementation committee and therefore ensure that their ministry, departments and agencies are not a clog in the wheel of progress of the AfCFTA.

I strong believed the first step that the government needs to take as a way of demonstrating commitment towards the AfCFTA is the appointment of a Special Assistant (SA) on Trade Across Borders who will work directly with the AfCFTA implementation committee by attending all their meetings, presenting their requests to the presidency and liaising with the various heads of ministries, departments and agencies to get the necessary cooperation and approvals. This special assistant is going to be a critical success factor in the implementation of AfCFTA because it will speed up the submission and approval of request at the presidency due to the fact that he is on ground to represent the implementation committee and follow up on the government for necessary approvals.

Secondly, the government have to demonstrate its commitment towards the implementation of AfCFTA by making deliberate policies that will encourage the exporters to want to export to African countries. This can be done through executive orders and acts of the parliament. Going by the timetable of the AfCFTA secretariat, the trading under this agreement will commence from August next year. That means the government have an ample time on its hand to put in place the right policies that will support the implementation of the AfCFTA. 

One of these policies must include incentives. Considering the high level of infrastructure deficit that any business operating in Nigeria has to contend with and the attendant increase in the cost of doing business that ensue, the government must of necessity put a system in place to give incentives to exporters. These incentives should come in the form of single digit loan for all exports going to Africa countries under the AfCFTA, rebate on air and sea freight, warehousing, local transport, duty on importation of raw materials and other statutory taxes. This is to ensure that Nigerian products are competitive in the African market. There should also be a deliberate policy towards the setting up of dedicated AfCFTA export terminals at major ports across the country. This is to ensure that goods being shipped under this scheme are examined for compliance and also given speedy clearance.

One of the major challenges being faced by the ECOWAS Trade Liberalisation Scheme (ETLS) which has consequently led to the low utilisation of the scheme is the inefficient processes that exporters need to go through in order to get the certificate of origin that makes their products eligible for the duty free access under the ETLS. In order to demonstrate its commitment to the successful implementation of the AfCFTA, the government needs to ensure that the process of obtaining the certificate of origin under the AfCFTA is fully automated, streamlined with paperless documentation, an online platform for tracking and feedback on the progress of application, devoid of any form of human interaction besides the visit to the production facility to ascertain the claim of the criteria for the rule of origin.

Also, it is very important to state that one of the factors that could prevent Nigeria and Nigerians from enjoying the benefits of AfCFTA is product quality issues. The committee must demonstrate its commitment to prevent the exportation of low quality products under the AfCFTA by ensuring that it closely works with the relevant government agencies at the port, especially the Nigeria Customs Service, to ensure that all goods to be shipped under AfCFTA are routed via the AfCFTA designated terminals where they will be inspected for quality assurance before they are shipped to final destination on the African continent. Another way of demonstrating commitment to the successful implementation of the AfCFTA in  Nigeria is putting in place a policy that ensures the participation of the private sector in the Monitoring of items that are being imported into the Nigerian markets duty free under AfCFTA. There should also be punitive measures put in place to ensure that any government agencies or individuals that is aiding and abetting unwholesome practice that will undermine the efforts of the AfCFTA implementation committee is brought to book.

What is the use of all the effort being deployed by the government and the implementation committee if the manufacturers cannot get to promote their products in other African countries simply because of the cost and logistics challenges? The government have to demonstrate its commitment to the AfCFTA by organisation solo exhibition in different countries on the African continents by partnering with Chambers of Commerce in the destination countries and also supporting Nigerian businesses with funds needed to participate in these various promotional programmes 

The areas of commitment described in this article are not exhaustive but are very critical and therefore worthy of consideration by the AfCFTA implementation committee. It is my hope that the implementation committee of the government will adopt some of the recommendations that are been prescribed in this article in order to make the implementation of the AfCFTA create the necessary jobs that will lift out of penury, the tens of millions of Nigeria that are currently living below the poverty line

For the love of Nigeria, Africa and Mankind.

Bamidele Ayemibo (bayemibo@3timpex.com)

Lead Consultant at 3T Impex Trade Academy

Nigerian States Are Billionaires in US Dollars-Part-73-Export Driven Youth Employment & Income Generation Potentials of Yobe State

Nigerian States Are Billionaires in US Dollars-Part-72-Export Driven Youth Employment & Income Generation Potentials of Taraba State

Nigerian States Are Billionaires in US Dollars-Part-71-Export Driven Youth Employment & Income Generation Potentials of Sokoto State

Nigerian States Are Billionaires in US Dollars-Part-70-Export Driven Youth Employment & Income Generation Potentials of Rivers State

Nigerian States Are Billionaires in US Dollars-Part-69-Export Driven Youth Employment & Income Generation Potentials of Plateau State

AfCFTA Implementation Strategies-Part-6: The Capacity

This is the sixth in the series of Articles on AfCFTA implementation strategies and the focus of this edition will be on Capacity building. No matter what the government is doing to get Nigerians to benefits from the AfCFTA, if the capacity of the business people are not developed to effectively manage and grow the export business, everything being done by the government would be a waste. The necessity of capacity building has been demonstrated by the fact that hundreds of new businesses get registered with the Nigerian Export Promotion Council (NEPC) to get the export certificates that makes them eligible to export every year, but the number of exporters that ship goods out of Nigeria every year has remained below one thousand in the last ten years. The question is, why is the number exporters and the volume of export not growing despite the increase in the number of registered exporters?  It is due to the lack of capacity on the part of the exporters to successfully do the shipment. 

Research has shown that a number of FTAs around the world have failed to achieved its objectives in some of the member countries because of the deficiencies in the export business management skills among the business people, especially the SMEs. One of the pivotal goal of the AfCFTA is to create jobs among the member states. This will achieved via the increased market demands which leads to increased volume of production and consequently leading to the need for increase in manpower. The impact of AfCFTA can only be felt by an average Nigerian on the street if the businesses are supported to develop the capacity to overcome the 5Ps of export business challenges and these include Products, Purchaser, Pricing, Paperwork and Payment. 

First of all, there is need for capacity building in the area products that can be exported to African countries and this should be based on what they currently import from other parts of the world. This should also include the quality specifications requirements of the different countries and what makes the products eligible for shipment within Africa under the AfCFTA. Our preliminary research at 3T Impex Trade Academy revealed that there are currently about 90 products that Nigeria can export to other countries in the in Africa based on what these countries currently import from nations in other continents of the world. As a matter of fact, publishing the list of these eligible products with their market potentials and using the organised private sectors to reach the manufacturers of these products in order to be able to engage them and get them to attend sector specific capacity building will be a good strategy.

The second area of capacity building for the manufacturers is the development of skills required to get purchasers abroad. It is one thing to have buyers all over the African continents, it is another thing to be able to get the buyer to buy from you. Capacity building areas with respect to getting purchasers should include but not limited to the following areas: international marketing, market entry strategies, product packaging, contract negotiations. It is a general belief among many exporters that the main challenge of exportation is getting buyers and this assertion was based on the fact that more than 70% of the enquires we get daily at 3T Impex Trade Academy regarding exportation is on how to get buyers. The capacity building on purchasers should therefore be aimed at changing this impression through the acquisition of the right skills and competencies to overcome this challenge.

Even though a manufacturer has a good product with huge demand on the African continent and also have the contacts of the buyers in different countries, he might still be unable to get buyers if he does not know how to effectively and efficiently price the products to be exported. The product manufacturers needs to know about different pricing strategies, different pricing objectives, product costing and pricing, cost elements in a typical export project Incoterms and how it affects costing, the logistics options and their cost implications. It is also necessary for them to know how to get the tariff concession schedule in order to be able to know the products on the non-sensitive list, sensitive list and the exclusion list. All these areas of export costing and pricing are highly imperative in order to be able to appropriately price their products in the African export markets. 

International trade is largely a business of logistics and documentation. The need for capacity building in the area of paperwork is very important because, if the documentation is faulty, it has the tendency to make the transaction to fail and lead to losses. Shipment of goods to destination can last for up to two months and the buyer might have to pay sometimes before seeing the goods especially in a letter of credit transaction. The exporters need to know about pre-export documentation and post-export documentation. The post export documents are peculiar to products and markets in question. If the documentation presented by the exporters leads to a discrepancies, it will cause delay in clearing the goods and this will consequently leads to extra cost in demurrage payment by the buyer abroad. 

The last but definitely not the least area that requires capacity building is the issue of payment. This basically involves sourcing from funds to pay local suppliers and getting payment from the buyer after shipment. The manufacturers and/or exporters will require capacity building in the areas of pre and post export financing and payment methods like Letter of Credit, bill for collection, Open Account and Advance Payment. Considering the fact that more than 80% of trade in the world are done on Open Account (Cash Against Document), which leaves the exporters exposed to the risk of either delayed payment or non-payment, it is therefore necessary to train the exporters on measures to put in place in order to mitigate this risk.

Finally, I will like state that inadequate capacity on the part of manufacturers is a major challenge that have bedeviled the implementation of FTAs in several developing countries around the world.  No matter the plans and strategies put in place by the government, if the actors are not equipped with skill and competence to take advantage of the AfCFTA, then the anticipated benefits will remain a mirage and at the level of potentials. It is my hope that the implementation committee of the government will adopt some of the recommendations that are been prescribed in these series of articles in order to make the implementation of the AfCFTA create the necessary jobs that will lift out of penury, the tens of millions of Nigeria that are currently living below the poverty line

For the love of Nigeria, Africa and Mankind.

Bamidele Ayemibo (bayemibo@3timpex.com)

Lead Consultant at 3T Impex Trade Academy

Nigerian States Are Billionaires in US Dollars-Part-68-Export Driven Youth Employment & Income Generation Potentials of Oyo State

Nigerian States Are Billionaires in US Dollars-Part-67-Export Driven Youth Employment & Income Generation Potentials of OSun State

Nigerian States Are Billionaires in US Dollars-Part-66-Export Driven Youth Employment & Income Generation Potentials of Ondo State

Nigerian States Are Billionaires in US Dollars-Part-65-Export Driven Youth Employment & Income Generation Potentials of Ogun State

Nigerian States Are Billionaires in US Dollars-Part-64-Export Driven Youth Employment & Income Generation Potentials of Niger State

Nigerian States Are Billionaires in US Dollars-Part-63-Export Driven Youth Employment & Income Generation Potentials of Nasarawa State

 

Nigerian States Are Billionaires in US Dollars-Part-62-Export Driven Youth Employment & Income Generation Potentials of Niger State

Nigerian States Are Billionaires in US Dollars-Part-61-Export Driven Youth Employment & Income Generation Potentials of Kwara State

Nigerian States Are Billionaires in US Dollars-Part-60-Export Driven Youth Employment & Income Generation Potentials of Kogi State

Nigerian States Are Billionaires in US Dollars-Part-59-Export Driven Youth Employment & Income Generation Potentials of Kebbi State

Nigerian States Are Billionaires in US Dollars-Part-58-Export Driven Youth Employment & Income Generation Potentials of Katsina State

Nigerian States Are Billionaires in US Dollars-Part-57-Export Driven Youth Employment & Income Generation Potentials of Kano State

Nigerian States Are Billionaires in US Dollars-Part-56-Export Driven Youth Employment & Income Generation Potentials of Kaduna State

Nigerian States Are Billionaires in US Dollars-Part-55-Export Driven Youth Employment & Income Generation Potentials of Jigawa State

AfCFTA Implementation Strategies-Part-5: The Communications

This is the fifth in the series of Articles on AfCFTA implementation strategies and this edition will be focused on proffering solutions to the challenges that have plagued the implementation of FTAs around the world particularly in the West African region. I strongly believed that, if some of these suggestions can be put into consideration in the formulation of the AfCFTA implementation strategies, we will be able overcome some of the challenges that ECOWAS Trade Liberalization Scheme (ETLS) and other FTAs have been experiencing around the world. This is the first in the series of recommendations that I will be making to the implementation committee and this will centre around the issue of Communications.

The successful implementation of any FTA like AfCFTA is hinged on the man that is carrying the message, the means that is available to funds the communications of the message, the medium through which the message is being communicated and the content of the message of the AfCFTA.  There are so many discussions on how best to implement the AfCFTA  and make it a success but not much is said about the issue of communication despite the fact that many research work done FTAs have shown that this constitutes a major reason why many FTAs have failed.

To put the challenge of communication into perspective, a recent research conducted among SME manufacturers in Lagos showed that 67% of the respondents are aware of ETLS but only 37.5% understands the details of the scheme. This therefore could help one to explain the reason why only 4% of the respondents had applied to the National Approval Committee (NAC) domiciled in the ministry of foreign affairs to register products under the ETLS scheme. This corroborated the research by Deloitte on ETLS in 2017, which states that the issue of inadequate information about the ETLS and hence the low awareness of the details of the scheme among the businesses in West Africa stands as a major impediment to the full utilisation of the scheme among the business communities in the ECOWAS member states. When asked about how they got to know about the ETLS, the responses received from respondents showed that the Nigerian Export Promotion Council (NEPC), a body saddled with the responsibility of promoting non-oil export and general seminars organized by individual companies and those organized private sector are their major sources of information about the ETLS.

The information about AfCFTA must be communicated clearly and continuously to the business community across Nigeria. This must be done for such a long time until the awareness of AfCFTA created in the consciousness of an average businessman in Nigeria gets to the level of awareness of major candidates of the political parties which was seen in during political campaigns. This simply means there must be a deliberate plan to communicate the gospel of the AfCFTA through all the communication channels available and sustain the tempo for a very long time. This can be done by the AfCFTA implementation committee in conjunction with the Nigerian Export Promotion Council, National Association of Chamber and Industry Mines and Agricultural (NACCIMA) and the organized private sectors. The communication of this message should follow the AIDA model of advertising. That means the messages going out should not just create the Awareness, it should continue enough to generate Interest in business people and this should be sustained in order to get the business people to Desire it, and after this, the propagation of the message should continued until it generates Actions, that is the participation of the Nigerian businesses in AfCFTA.

The messages to be communicated about AfCFTA to the business community should should be very comprehensive and this should include but not limited the following: 

Programme- this message of AfCFTA should state the details of the agreement like the rules of origin, protocol on trade in goods, protocol on trade in services and the dispute resolution. This is to let them have a comprehensive overview of the agreement 

Profits- the AfCFTA messages to be communicated to the business communities should clearly state the benefits of the agreement to the Nigerian people, Nigerian businesses and Nigerian economy in general. This is to create the necessary motivation in the businessmen 

Policies- the message should also convey the policies that the government is putting in place to help the Nigerian businesses to be able to participate in the AfCFTA. This is to let the business community see the commitment of the government to support them

Procedure- in order to benefit from the AfCFTA there will be laid down step by step procedures. This should communicated to be business community in form of info-graph and distributed in pamphlets at any AfCFTA event. This is to let the business community know exactly the step by step process of how to get started 

Paperwork- the paperwork is a major challenge for many SMEs under the ETLS. The documentation required should be communicated to the business people together with people who can help them do it. This is to ensure that having created the awareness, the people are not discouraged by the challenges of the documentation requirements

Product- In order to ensure effectiveness and efficiency in the pursuit of AfCFTA by the exporters, the implementation committee should also make available after a thorough research, the list of Nigerian products with potential within the African continent 

Purchasers- it is not enough to make Information available about product with potentials in African market but also making available, the list of countries that buy and if possible the companies that buy such products in the various countries become very important 

Promotion- there is the need for promotion of Nigeria products in the various export markets in Africa. This should be parts of the implementation plan of the AfCFTA committee and it should be done through solo exhibition in the target market. This promotional programmes should be well publicized and financial support should be made available in order to get the Nigerian businesses to participate 

Payment- the payment information here has to do with making information available on funding for procurement and processing in order pay local suppliers and workers respectively. It also involves making information available on payment facilitation so as to ensure that they get paid after shipment 

People- The men to communicate these messages is a critical aspect of AfCFTA communication plan. He has to be trained and readily available online and offline. Such people should have an office in different states of the federation and the information about how to reach them for enquires should be made available to the public.

Finally, I will like reiterate the fact that the challenge of effectively communicating all the information about FTAs have been the major impediment and clog in the wheel of progress in different parts of the world. It is my hope that the implementation committee of the government will adopt some of the recommendations that are been prescribed in this article in order to make the implementation of the AfCFTA create the necessary jobs that will lift out of penury, the tens of millions of Nigeria that are currently living below the poverty line

For the love of Nigeria, Africa and Mankind.

Bamidele Ayemibo (bayemibo@3timpex.com)

Lead Consultant at 3T Impex Trade Academy

Nigerian States Are Billionaires in US Dollars-Part-54-Export Driven Youth Employment & Income Generation Potentials of Imo State

Nigerian States Are Billionaires in US Dollars-Part-53-Export Driven Youth Employment & Income Generation Potentials of Gombe State

Nigerian States Are Billionaires in US Dollars-Part-52-Export Driven Youth Employment & Income Generation Potentials of Enugu State

Nigerian States Are Billionaires in US Dollars-Part-51-Export Driven Youth Employment & Income Generation Potentials of Ekiti State

Nigerian States Are Billionaires in US Dollars-Part-50-Export Driven Youth Employment & Income Generation Potentials of Edo State

Nigerian States Are Billionaires in US Dollars-Part-49-Export Driven Youth Employment & Income Generation Potentials of Ebonyi State

Nigerian States Are Billionaires in US Dollars-Part-47-Export Driven Youth Employment & Income Generation Potentials of Cross River State

Nigerian States Are Billionaires in US Dollars-Part-48-Export Driven Youth Employment & Income Generation Potentials of Delta State

Nigerian States Are Billionaires in US Dollars-Part-46-Export Driven Youth Employment & Income Generation Potentials of Borno State

Nigerian States Are Billionaires in US Dollars-Part-45-Export Driven Youth Employment & Income Generation Potentials of Benue State

Nigerian States Are Billionaires in US Dollars-Part-44-Export Driven Youth Employment & Income Generation Potentials of Bauchi State

Nigerian States Are Billionaires in US Dollars-Part-43-Export Driven Youth Employment & Income Generation Potentials of Bayelsa State

 

Nigerian States Are Billionaires in US Dollars-Part-42-Export Driven Youth Employment & Income Generation Potentials of Anambra State

Nigerian States Are Billionaires in US Dollars-Part-41-Export Driven Youth Employment & Income Generation Potentials of Akwa Ibom State

Nigerian States Are Billionaires in US Dollars-Part-40-Export Driven Youth Employment & Income Generation Potentials of Adamawa State

Nigerian States Are Billionaires in US Dollars-Part-39B- Export Driven Youth Employment & Income Generation Potentials of Adamawa State

CBN Export Policy Against Open Account Is A Threat To AfCFTA and Non-Oil Export Growth

The Central Bank of Nigeria (CBN) is set to implement a policy that technically placed a ban on the use of Open Account trading (also known as Cash Against Document) on exportation from Nigeria. This policy has the tendency to slow down export growth and prevent Nigeria from being part of the $16 trillion trade transaction done on this term, which also amount to about 85% of global trade. It will reverse the upward trend currently seen in the non-export volume and make the signing of and plans to take advantage of the African Continental Free Trade Agreement (AfCFTA) a waste of time. This policy is being done on one hand through the recently released foreign exchange manual that omitted Open Account as a payment method for exportation from Nigeria and on the other hand, it is being enforced by omitting Open Account as a payment method on the current application being developed by the CBN to automate the processing and documentation of non-oil exportation from Nigeria. Both the manual and the application stated that the payment method for export out of Nigeria will now be Letter of credit (LC), Bill for Collection (BC) and Advance Payment (AP).

By way of definition, Open Account (Cash Against Document) trading is said to happen in international trade when an exporter ship goods to the buyer abroad and also sends the shipping documents to the buyer in order to be able to clear the goods and effect payment for the goods at a later date. This method leaves the exporter exposed to the risk of payment defaults. This then prevents the exporter from being able to repatriate the funds for the shipped goods back to the country. Since CBN has technically ban this payment method by omitting in both the foreign exchange manual and the application being developed for export processing, we are then left with other payment methods like LCs, BCs and APs. 

Declining Usage of Letter of Credit

The philosophy behind this policy is to ensure that all the export proceeds resulting from shipments of goods out of Nigeria are duly repatriated. Even though the reason for this policy is good, however, I think the way the CBN is going about the enforcement of the repatriation policy is wrong. This is because this policy is a typical example of throwing away the baby with the bath water. This is because the policy has the tendency to badly affect the volume of non-oil export trade from Nigeria since the other payment methods (like LCs, BCs and APs) that are allowed constitute less than 15% of global trade. According to a 2010 report of Society for Worldwide Interbank Financial Telecommunication (SWIFT), the LCs issued for trade transactions in the world constitutes about 9.3% of total volume of world trade while BCs constitutes just 1.4%, Open Account is about 85% while other payment methods including AP constitutes about 4%. The 2019 global trade finance report of the International Chamber of Commerce (ICC) showed that from 2013 to 2017, there has been about 12.7% reduction in the usage of LCs for trade transactions across the world. The report of Unicredit Group in 2015 showed that the ratio of LCs to Open Account usage which used to be 80% to 20% respectively in 1978 is now 19% to 81% in 2013. The report went further to state that “the world trade volumes have seen a startling increase in open account transaction over the recent years. Already today more than 80 % of the total world trade volume (export) is settled by clean payment (open account). This impressive ratio is expected to grow even further in the future. Therefore, banks are compelled to offer their corporate clients, products that support fully automated processing as well as cost savings combined with payment assurance and financing options”. 

Why Open Account Trading is Growing 

The decline seen in the usage of LCs and BCs in trade transactions despite the increase in the trade volume in the world has been attributed to several reasons and some of them include the following: Operational and transactional inefficiency due to paper handling, filing of documents and retrieval of the trade transaction files; Extended transaction timeframes caused by discrepancies in the document presented on LCs transactions and this has been stated to affect 70% of the trade transactions in the world; Delays in settlement caused by seeking for waivers on discrepancies; High cost of trade caused by commissions and charges of LC and amendments; Transactional and operational risk caused by buyer refusal of the goods or seeking for discount base on discrepancies. 

The reason why CBN can afford to take this step despite the far reaching negative impact that could result in the non-oil export sector is likely because the management is either not aware of the volume of trade done via Open Account and hence the implication of banning it or the management is thinking that if the restrictions on Open Account trading worked for import, then it can work also for export. I don’t think the first option is case because that level of ignorance will be an indictment on CBN as highly placed organisation. However, if the CBN is doing this because of the second reason, which means if it worked for import, then it can work also for export then the CBN need to be educated on the driver of Open Account trading in the world. The global shortage of trade finance is contributing to an intense competition in export markets. This is especially the case is less developed markets. Because many importers cannot arrange import financing sufficient to book purchases, exporters are unable to find enough importers to purchase their goods. Exporters are therefore compelled to offer Open Account terms to importers or lose sales to their competitors. Therefore, it worked when it was done for importation because it is safer for the seller, buyers generally have option to buy from another seller and Nigeria is a big market that every seller wants to enter. However, the current reality will not allow the policy to work in our favour on the export side.

Negative Impact of Stopping Open Account Trading 

The implication of this technical ban on Open Account trading in Nigeria is going to be a significant decline in the volume of non-oil exportation because: One, it will cause the Nigerian exporters to loose business their competitors since many competitors will be willing offer Open Account terms to potential buyers. Two, this action will lead to increased level of illegal exportation. That means, many exporters are going to start shipping goods out of the country without documentation. This will be a repeat of what happened during the last economic recession when many exporters stopped using NXPs to process their export transactions through the banks due to the losses they were incurring by being forced to sell their export proceeds to the banks at a loss whenever they process NXP. Three, if CBN is able to prevent illegal exportation through the sea, there will be a surge in the exportation out of Togo, Benin and Ghana because many Nigerians are going to be shipping their goods out of Nigeria via road and then ship it out of these neighbouring countries via sea. This is already happening especially from the northern part of the country due to the delays at the Lagos port and this ban is only going to further aggravate such practices and lead increase in such shipments. All these are going to have a negative impact on exportation in Nigeria and make the current drive towards increase in non-oil export and implementation of AfCFTA a waste because the inflow of the export proceeds will start declining very fast. 

Recommendations To CBN

Instead of running away from Open Account trading, the question we should be asking is, how are other nations of the world able to do use this method and still get the proceeds repatriated? It is obvious that they have found a solution that we are yet to search for. First thing first, I think the CBN needs to first work with the relevant agencies to reduce the delays at the Lagos port which currently handles about 60% of the shipments out of the country. Also, there is a need to effectively track all shipments out of Nigeria by ensuring that the shipping lines have access to the current application being designed by the CBN to drive exportation. This is to ensure that the shipping lines pick up the NXP numbers of all shipments from the systems by themselves and not relying on the exporters to provide it for them. This will curb the incident of forged NXP numbers currently used by some exporters to do illegal exportation. This will reduce illegal export via the seaport and help the CBN to capture almost all exports out of Nigeria. After this, the CBN needs to educate all exporters across the country together with their banks on the implication of non-repatriation of export proceeds and also sanction the exporters and NOT the Banks for non-repatriation. However, before they are sanctioned, the CBN needs to train them on how to prevent the risk of payment in their export transactions. Kindly note that, 3T Impex Trade Academy has identified seven ways to prevent the risk of payment default in Open Account trading and we are willing to partner with CBN to deploy this training programme for exporter across the country. Implementation of the sanctions on erring exporters after the training will greatly deter others from repeating this unpatriotic act.

Conclusion 

In conclusion, I will like to appeal to and plead with the CBN to rescind on its decision to technically ban the use of Open Account trading as payment methods in Nigeria. This is to ensure that the current increase in volume of non-oil exportation out of the country does not nosedive, so we don’t end up building the economy (and non-oil export volume) on one hand and then using our own hand to destroy it at the same time.

For love for growth of trade in Nigeria and Africa in general.

Bamidele Ayemibo/bayemibo@3timpex.com 

Lead Consultant, 3T Impex Trade Academy